Sound Energy plc (SOU) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Sound Energy plc Investor Presentation. Throughout the recorded meeting, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Just click Q&A, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Graham Lyon, Executive Chairman. Good afternoon, sir.

Thank you very much, Paul. I'm, as you can see, ably helped by my Chief Financial Officer, Garry Dempster; and our VP of Geoscience, John Argent. So I'm going to go through a presentation very briefly, what's been quite a tremendous week for Sound. And we're going to go through the presentation, then we'll take the questions that have been pre-submitted. There were quite a few duplicate questions, so we'll collate those and take them in total. Some may be answered during the presentation anyway. I will ask John to go through some of the technical questions, exploration questions, and then discuss with Garry the finance questions, and then Garry is going to turn the host to me, and I'll summarize any general questions at the end. So, welcome to our presentation. So we've done the deal. The transaction was completed on Tuesday evening last week, I think, around about 6:45, 7:00 p.m. in the evening. And for those that are not familiar with this, we have sold a British subsidiary called Sound Energy Morocco East Limited, a U.K. subsidiary of our plc company, to Managem SA, a Moroccan entity. Sound Energy Morocco East is the operating company in the Tendrara concession and in the Anoual and Grand Tendrara exploration licenses. In exchange for selling the shares in Sound Energy Morocco East, there's a financing package put in place. And that financing package, the effective date is back to 2022, January 2022. So as you know, Managem has been a partner with us for almost 2 years. The [ guts ] of the deal is the equity financing that we require for our Phase 2 gas pipeline development, and that's just over $24 million. There is a contingent payment of $1.5 million once we have first gas through the pipeline, subsequent to about a year of production of that. We also have 2 exploration wells. And I think you'll know for a small cap company like ourselves, getting the exploration drilling again is quite exciting, and we're confident that with Managem now supporting us, we'll get some exploration wells drilled in the not-too-distant future. So we have the SBK-1 well on the Grand Tendrara license carried by Managem. They will fund our share of that activity. And we have the M5 well on the Anoual exploration license funded by Managem. The back costs that Sound Energy plc has put into Sound Energy Morocco East since January '22 have been returned to us, and the funding that we put into the exploration over the last 2 years has been returned to us. So we're sitting on a much healthier bank balance, and I'm sure Garry will answer some questions on that. For those of you who haven't been following the program, Managem are a substantial Moroccan heritage mining company. Throughout Africa, they're active in the mining world. And they have started a third leg to their business, and it will be on the energy front. So a substantial company, $2 billion, maybe $3 billion market cap, and a very experienced operator in the mining world. So this is a step out for them into the hydrocarbon area. Financially very strong. They are in turn 82% owned by the Al Mada Group, which is essentially a private equity fund across Africa, and they have a freefloat of around about 10%. So they're listed on the Casablanca Stock Exchange. But for those of you, you can dig deeper, they have good corporate information on their local website. Now we've sold Sound Energy Morocco East, which includes our staff down in Morocco, includes the office in Morocco, includes our operating people out at Tendrara, but however, not all of the services that are locally provided in Morocco to Sound Energy Morocco East were those staff. So our corporate office, our London-based office provided services as well. And in helping Managem them to affect a very smooth transition, so there's no hiccups in this transaction, we put in place a transition services agreement, which was signed at the same time as the closing. And within that, there are 4 areas that we'll be supporting them under 3 already issued work orders. One is the finance and the accounting. Here we are on the 18th of December. The year end for Sound Energy Morocco East is 31st of December. And so it makes a lot of sense for our finance team to complete the activities in the year-end resulting. We'll also provide some accounting services until that formally transitions because of the banks and the way it takes to get all that transition across. Mohammed Seghiri, our Chief Operating Officer, is a London-based, a plc-based employee, but he spends quite a bit of time on the ground in Morocco. So under that term, there's a service request for Mohammed to continue the day-to-day management of Sound Energy Morocco East. He's one of the directors of Sound Energy Morocco East alongside Garry. Health, safety, security, and environment, very important to us, and we don't want to see any slip-ups during this transition. Now Managem is a big international operating company, and it has its own policies and procedures. So generally, what we're looking at is a transition from one set of policies and procedures to another. Broadly, they're very, very, very similar for safe, well-run operations. However, policies and procedures, bridging documents, everything has to be put in place and also the support of the local supervisors, the site supervisors from our manager here in the U.K. And then finally, and John will talk about this, we're keen to move the exploration forward. Although Managem is the operator and it will take the lead, we are able to support them on the exploration front, and we will do as much as they request us to support them in preparing for drilling the 2 carried exploration wells, which we'd like to progress sooner rather than later. And John will go into that in a bit more detail. There are some good questions about that. Here's our Phase 1 micro-LNG project. Some of you have seen these pictures. And so equipment is arriving at site. It's already, more equipment's arrived even in the last 2 days. And so that project is moving ahead. It's admittedly not as fast as we'd wanted to, but now Managem have come in with, let's say, a stronger backup project management teams. We will be looking at having this equipment on site later this year, early next year. We'll be looking at commissioning the gas, the pipelines, the flow lines, sorry, the wells are ready. The flow lines will be in place. We'll be commissioning entering into gas into the processing facility early H2 next year, and we expect to be getting LNG revenues and fully commissioned plant during second half of next year. Why did Managem come into this project? Because they see the importance of developing gas in the region, the need for Morocco to fuel its power stations, it's 2 gas-fired power stations on the GME pipeline. And they're very committed to delivering the pipeline project. So it's great that Managem have come in. They provide the equity part. We've talked about this in the past. They provide the equity part to the overall project funding that's required, and Attijariwafa Bank are providing the debt financing that goes with that. What do we need to take financial close or final investment decision? We need to have the gas sales agreement concluded, and we also need to do the update of the FEED study, front-end engineering and design study. We need to get that done. And I have to say Managem are already undertaking that activity now. We have to establish an EPC contractor, engineer, procure, construct contractor. And obviously, we're working to lead to a final investment decision, again, second half of next year. So the key for our transition is to make sure there's no loss of momentum on this. And in fact, by bringing Managem in, we can actually accelerate what Sound was doing on this Phase 2 development approval process. On the financial overview, this is an ever-changing story. And even this slide should probably be updated. We know where we are. We have a balance sheet issue of EUR 25.3 million on the Euro bond. I'm sure Garry will discuss that a little bit more. That still exists. $18 million of debt with Afriquia Gaz, which we are servicing the interest on that right now. There was GBP 0.25 million of institutional investor in a convertible loan not. We paid that off in the last 24 hours. And so we're moving on, and we're optimizing our balance sheet as we can. The market cap, even though this slide was dated last week, we're about 50% higher than that. I think we're around about a $30 million market cap now as opposed to a $17 million market cap. So yes, the financial world is something we have been very focused on. Why we're excited about this deal, not only bringing Managem in as our partner, we are looking forward to drilling the SBK-1 well up on the Grand Tendrara license. And it's not SBK-1. It's a little bit offset from that well, but that well was a well that discovered gas and actually tested gas. And well on M5, a large prospect, a riskier prospect for sure, small wildcat exploration. But again, it's a big project and a good prospect. But even though we've lost the operation of Sand Energy Morocco East to Managem, we're a nonoperating partner, we're going to do our best to influence them and make sure they keep the schedule going, and I'm sure they will, because that's why they bought in. But we are an operator of Sidi Moktar. And Sidi Moktar is in the South, and we're planning operations on that. We're 75% owner of that, and we're planning operations on that and starting the seismic program early next year, which could mature a prospect for drilling within a period of time. So we still retain operatorship in Morocco in the Sidi Moktar license at 75%. So that's a brief overview. I think most of you know the story now, but we've updated this. And what I'd like to do is pass back to Paul before we take the questions.

Fantastic. Thank you very much indeed for running through your presentation there. As you can see, we have had a number of questions throughout today's presentation, and both pre-submitted as well. So thanks to all the investors for those. And do please continue to submit your questions just by clicking on that Q&A tab, typing your question, and pressing send. Graham, perhaps if I could just hand back to you, and I haven't given you a huge amount of time to look at those questions that come through, but we did have some pre-submitted questions. If I may, just ask you to read those out where appropriate to do so, direct them to the team, and I'll pick up from you at the end.

Yes. So I think there were 28 originally came through and about 6 or 7 were very similar. So we'll group those together. So, I'm going to start with some more technical exploration questions to John. John, good evening. Could we have an update re the progress of the storage tank? Is this on time or is it going to delay the gas sales? Thank you.

Okay. So thanks, Graham. Good evening. Yes, look, the tank is progressing really well now, thanks to the additional effort of the team working on site. And I'm pleased to say it's no longer on the critical path. They're currently welding the lowermost shell course at the moment. The tank is at full height, and it's a pretty impressive structure. And we've been sharing photos of the erection of that tank over the last few months.

Good. Thank you, John. This is one which I think we're all keen on. You previously said that you could start drilling 9 months after the Managem deal was signed off. Can you confirm that you will be able to spud Anoual late September 2025?

So Anoual, that's the M5 well, but there are 2 exploration wells, SBK-1 and M5, which comes first really, that depends on the choice of rig and the forward planning. Okay? Managem as you know, now they're the operator. And clearly, they've given us every indication that they are absolutely as keen as us to open up the full gas potential of this basin with more drilling, okay? So those of us who work in this exciting industry will appreciate that there is a lead time to secure long lead items for a drilling program, multi-well drilling program like this. It's not just the rig. There are tubulars, wellheads, Christmas trees, other hardware as well. And in addition to the rig, there are drilling services as well, mud engineering, directional drilling, wellhead services, tubing and running, services completion, waste management, transport, civil works to name but a few. But having said that, if Managem want us to fully lead this exploration drilling, 9 months is feasible.

Great. Thank you. Here's a very topical one. Will the company be using the help of AI to find the sweet spots?

Okay. AI, yes. So, yes, so automated approaches including the many machine learning, neural networking, and now AI, there's lots of buzzwords around this, they've long been part of the oil and gas industry, geophysical interpreters' toolkits, okay? And we previously used some of these techniques in the past. But all said and done, we always need the drill bit to find the gas prospects that have been identified for drilling. That's M5 and SBK-1, and we also have TE-4 as well, and other features on the books in the portfolio.

Thanks, John. This one's maybe different way of reviewing it. Does mining license -- I think they mean, do the mining license depend on any external factors or experience? Maybe an award of a license or something?

Okay, I'm going to assume mining license mean petroleum license or permit. So yes, there are requirements to meet some financial and technical capabilities. But it's important to appreciate that we sold our subsidiary Sound Energy Morocco East Limited, as a going concern, as an entirety, so the whole subsidiary. So that subsidiary meets those requirements. So I hope that answers those questions. There are no hurdles for Sound Energy Morocco East Limited as a wholly owned subsidiary of Managem.

Thanks. Well, whoever asked that question can clarify on the online questions. If we didn't answer it properly, you can get back to us. John, what will Sound be working on after the 2 wells have been drilled? I assume that means the 2 exploration wells. Will it be looking for other locations to drill?

Yes, absolutely. So, yes, you've got the 2 carried wells there that we're working on. But obviously, we'd like to drill a third well at TE-4. That's certainly an aspiration of us. And also, there's the development drilling as well to get to first gas. There'd be 5 horizontal development wells to drill prior to first gas on the full field development. But also, we hope to be appraising a new gas discovery in the basin as well. And also, it's important to know that we're still operator of Sidi Moktar. We're aiming to undertake seismic on that next year to mature a lease to drillable status. And we're also engaging in further new business development, as you know. So watch this space.

Well, that's a good segue into the next question, John, because it's, will Managem be helping you with the Sidi drill? If so, will Sound be able to maintain such a high percentage ownership of Sidi rather than where we are at Tendrara at the moment?

No, I'd say no, that's currently all Sound's work. First, obviously, we must carry out the 2D seismic survey. And the seismic survey, we have to firm up a prospect for drilling. We're seeking a farm-in partner for Sidi Moktar as well, and we are engaging with a number of potential parties. So again, continue to watch this space, and there'll be more news to come on that.

Great. There's already -- the people like the Sidi question. So there's already a pipeline close to Sidi, which connects the adjacent field with a fertilizer plant. If we're successful in drilling Sidi, is there a market for our gas? Would that pipeline be used? Or is there a need for a considerable investment to market the gas in another way?

Yes. So there are multiple ways to monetize any discovery, as you're fully aware, Graham. But let's have a look at that pipeline. So that pipeline connects the Meskala field to the OCP phosphate plant. It's an 8-inch line, and it's about, I think, about 125 kilometers in length. But an 8-inch line there and the gas that supplies from Meskala to the plant itself, there really is additional capacity in that plant already today. And just a further 50 kilometers away from that phosphate plant on the coast at Safi is a 1.4 gigawatt coal-fired power station, which could, of course, be converted to gas. So that would provide another market, which would be a relatively what we think a straightforward hookup into that existing pipeline network.

Thanks, John. Well, this next question, you've sort of half answered some of it, but I think we can go into a bit more detail. When can we expect drilling to commence either SBK or M5? How long will the drills take to determine commerciality? And which one's first?

Okay. Well, I've discussed some of that before. So Managem is now the operator. With M5, that could likely be drilled with the Star Valley Rig 101, which we currently have on site. And SBK, that would need a rig with much higher capacity. So that would either be the Deutag rig, which we have stacked at the TE-10 at the moment, or a rig sourced from outside of the country. So with Managem, we'll obviously be seeking to fully optimize the drilling campaign. And therefore, no decision has been made on drill order at this point in time, I would say.

Great. Thanks, John. And this harks back to an RNS we put out a month or so ago. At first glance, exploration for helium and natural hydrogen, white hydrogen, would seem to be going off on a very wild tangent. Is there any evidence to suggest this could be commercially viable in Morocco? What have we committed so far? What's it going to be financially? Is this all just simply sharing data we own?

Okay. So yes, this is a very new area for us, but it's the one that has big potential, but a very low initial cost. And we've partnered with what is a world-leading company with some specific expertise in hydrogen and helium. That company, as everyone knows, is Getech. Our costs are minimal in sharing our geological knowledge as a Moroccan operator, alongside our local relationships as well, and how we've been leveraging that with our partner Getech there. So, for me, this agreement is an exciting, initial, early step towards diversifying our portfolio, introducing a new business stream, but particularly alongside our primary focus, which is our ongoing natural gas hydrocarbon opportunities. So the results of that study, I'm expecting them to be available mid-year, mid-next year, 2025. And also of note, if people can have a look, we're not the only ones that see Morocco as having potential for hydrogen and helium. There are others working in the region, if you do some of your own research.

Great. Thanks, John. Garry, we'll bring you into the equation now. We're going to move more to the financial aspects of the questions that people are asking. In the RNS, it said the company will be supporting Managem for a period of time to ensure uninterrupted transition program. What will Sound's role be, if any, as we have a free carry, right? Will Sound be paid for any services they render in the activities?

Okay. Well, good evening, everyone. Nice to be speaking to you all again. So Graham has covered some of this already. We entered into a transition services agreement with Managem, and the idea really is to provide continuity so that Managem can keep running with the program, with the objectives that were in place previously. So it covers finance, management, HSSE and [ exploration ] activities. And these are paid services. So, Sound Energy plc gets paid for providing that support to Managem, as well as obviously benefiting from the continuing operations and the continuing support. In terms of our role in the drilling program, obviously, Managem will be the operator through their acquisition of Sound Energy Morocco East Limited. But we will provide certain levels of support under that transition services agreement. And obviously, we'll have a role in the governance of the drilling program as a non-operator, which we will fully take on.

Thanks, Garry. How do you see the outstanding debt being paid off without further dilution? I assume that means share dilution, right?

Yes. Okay. So I guess the first thing is that we don't have any shareholder authority at the current time to issue any new shares other than those present commitments that we have. But I think the second thing that's quite important to say is that we've always met our debt obligations as a company. So the base case is obviously that we repay debt out of cash flows that we generate in the business. Having said that, the company does have significant debt on the balance sheet. And I think I mentioned on the previous investor call that one of our key strategic priorities is debt restructuring/debt refinancing, as well as continuing to mature other revenue-enhancing opportunities that we have within the hopper. So there's a number of different things that we have in our armory and that will be maturing over the coming period to ensure that we continue to meet our debt obligations.

Thanks, Garry. Yes, that's going to be a 2025 focus for sure. Are shares to be rerated by the broker?

Well, the broker Zeus updated their research following completion of the Managem transaction last week, so that can be accessed on the Sound Energy plc website. Having said that, it had actually already factored in the terms of the transaction with Managem, including the cash inflow that we received from them and also the carries on the development side and on the exploration side. So that's already factored into their valuation. They carry a risk valuation of GBP 0.04 per share, which obviously is somewhat ahead of where we're sitting at the moment. It's actually very pleasing that we've seen some upward momentum over the last week in the share price following completion of the deal. Hopefully, that trajectory will continue as we look to deliver the next steps in the strategy over the coming period.

Good. Thanks. It would have been great if the agreement had left Sound with more than 20% of Tendrara, but 20% of what is now something real and assured is far better than 75%, which was fantasy. Presumably, the figure of 20% was a reflection of Managem taking over the near 10% portion of Schlumberger's. Has this agreement with Schlumberger now been fully resolved?

Yes, I think the first thing I would say is that we're delighted with the terms of the transaction with Managem. We think it represents excellent commerciality and value for money for Sound Energy plc shareholders. And as part of that, Managem did take on that liability for the NPI agreement with Schlumberger. So that's now firmly in their control following completion of the transaction.

Good. Thanks for clarifying that. Could we have a figure for the revenue that would be generated by sales 20% of Phase 1, not forgetting the substantial fees payable to Italfluid? I assume that means the OpEx.

Yes, good question. So again, I would guide people towards the broker's research, which gives a really good representation of the future revenue generation potential of the company from Phase 1, and then obviously from Phase 2 thereafter. They value the Phase 1 annualized revenues net to Sound's retained 20% interest at $6 million per annum, and also with an EBITDA around $2 million to $2.25 million per annum.

Good. Thank you. Again, a bit more on the debt side. Sound's 20% of Phase 1 and the cash received from Managem will not be sufficient to pay the EUR 25.3 million Euro bond by 2027. How are you going to pay it?

Good question. And I think I've covered some of this already. Obviously, we do continue to service the interest on the bond. As I had mentioned, we've never failed to meet an interest payment on the bond, and we don't intend to do that going forward. Obviously, there's a substantial principal that's due for maturity in 2027. I've mentioned that we are actively looking to strengthen the balance sheet. So watch this space over the coming period. That's a key strategic priority for us. We've got an excellent relationship with the bondholders. We've already restructured the bond twice over the last 3.5 years. So we've got a number of different options to manage those debt obligations that are being matured.

Yes. Thanks, Garry. This one, I think, goes to the crux of what the deal is, and making sure people clearly understand the value of this equity carry that we're getting from Managem. It's equity carry, right? The actual -- it's not a debt. The actual cost of Phase 2 is still to be determined. There is little doubt that these costs have risen since the original estimate. What happens if Sound's 20% share of the revised cost exceeds the [ $24.5 million ] that Managem is going to carry us through? Will Sound's share be reduced even further if we're not able to meet our funding?

Yes, it's a good question. So the first priority of the project team on Phase 2 is to commence a recycle of FEED. So that's going to start at the beginning of 2025. And that obviously will enable us to firm up the cost estimates for the Phase 2 project ahead of taking FID. As things stand, the development carry is ample, and it covers our share of the equity financing that we require to meet the pre-first gas CapEx. So we're comfortable that the carry is sufficient. And actually, the way we structured the SPA, if there's any carry remaining at first gas, then that rolls forward, and we can utilize that carry for forward expenditure post-first gas.

That's good. Here's a nice one. Hi, Sound team. Congratulations on the completion of the sale. Moving forward, could you outline the LNG plant progress? We've said a bit about that and the expected completion date. But this is the financial bit, really. If legally possible, can you confirm the cash balances after you've settled any historical supply invoices you've had, plus any short-term bridge loans that the company had?

Okay. So all of our debt and supplier balances are up to date. So it's obviously a good place to be in. We don't have any short-term debt on the balance sheets anymore, as Graham mentioned. We made a payment within the last 24 hours to settle the remaining GBP 250,000 balance that was applicable to the convertible loan note that we entered into last year. So obviously, as investors are aware, we had a significant inflow, just over $13 million of funds from Managem last week. So the company's cash balance is much healthier than it's been for quite some time.

Yes. Thanks, Garry. Will you consider a share buyback to improve the share valuation position?

Yes. We get asked this question a lot, and it's an important question. It's a good question. We form the view that the best use of funds will be to enhance the business. We've got a variety of different opportunities in front of us. Share buybacks tend to be undertaken by companies that have run out of ideas, or they don't have any opportunities to invest, or they can't find any accretive acquisition targets. So we believe that we've got many more opportunities in front of us to spend more effectively and deliver greater shareholder value by deploying the funds that we have rather than using them for share buybacks.

Well, that's good, Garry. Thank you. Can I turn the tables, and then you ask me a few questions?

Sure. Okay, bear with me. Okay, Graham. So you said on the Zak Mir podcast on the 11th of December on take advantage of perhaps people that are not in such a strong position as Sound. What does this allude to?

Yes. And I know that podcast came within hours of us closing. So I was on a little bit of a high, I think. But for the first time in many years, we as Sound can consider our future and drive our own destiny, as opposed to being reactive to the events that are thrown upon us or scratching around to find the cash to do things. We're in a good position now compared to where we were even 6 weeks ago. But there are a lot of other companies on the AIM market with opportunities that don't have such a fortunate position. And therefore, maybe we can be opportunistic and grow our company by using the strength that we have now, either some of our cash or the foundation that we have, knowing that our development is fully funded.

Okay. Thank you, Graham. So there were a few questions relating to the timing of Phase 1 first gas FID on Phase 2 FEED, et cetera. I think we've covered those already through the presentation. So I'll skip to the next one. And there's been some great questions today. So thank you, everyone, for posting those. I think this one looks like, Graham, it may have come from your wife. But I will read it regardless. It says, before I ask my questions, I would like to thank Graham and the Sound team for the huge achievement of the Managem deal. Seeing the videos of the latest interviews with Graham looking relaxed and confident is greatly reassuring. He has put not only a massive amount of hard work and time, but real heart and soul into reaching this deal that he definitely believes is best for Sound and as shareholders, even though it is taking longer than hoped and real progress is being made. Thank you very much, Graham.

Well, thanks for reading that out, Garry, and I can assure you that wasn't my wife. But I think the main thing for me to say, it's good to have some positive feedback. We thrive on positive feedback as well. We accept the negative feedback, and we try and do better, but positive is good. But it's not a single person's work. It was a team teamwork. This process has taken quite some time. Everyone really put in a shift and a half. But I would say a special thank you to Garry, who saw it from almost day 1, if not day 1, to literally the very stressful day of closing last Tuesday. So thanks for that.

Thank you, Graham. Okay. The next one is a long question yet again. TE-5 and TE-4 are in the East, close to the border with Algeria. Both SBK and M5 are to the West of TE-5 and closer to customers. If either of these fields are productive, and M5 could be many times bigger than TE-5 in the eyes of Managem, it might make more sense if the proposed 120-kilometer gas export pipeline was to be located further to the West with M5 rather than TE-5 becoming the central production unit. It could make more sense to wait for the outcomes of the 2 exploratory drills before committing to the Phase 2 pipeline. This could put a very significant delay in us seeing any real revenue. Does Managem share a sense of urgency in completing Phase 2, and are they happy with the proposed pipeline?

Thank you. Well, a long question, and I do get the gist of it. And yes, we're all very impatient. So any delay, nobody is going to be very happy with that. But let's look at it. Managem bought into this project for the pipeline project. They are fully aware of what the pipeline project is, all the work that's been done to get the pipeline corridor, the FEED study that was done before, the design capacities, et cetera. So I would say the M5 prospect is a large prospect, and it could even sustain its own development. But the main pipeline, the 120-kilometer pipeline, is slap bang in the middle between Anoual and Grand Tendrara from the host. And it has sufficient ullage in it to take any volumes that we can find at M5, or SBK-1, or TE-4, or any further prospectivity that we like. So no, Managem is fully behind developing this project. They're ready to kick off the FEED study. They're already working with Attijariwafa Bank to close out that bank debt and with ONEE to get the gas sales agreement ticked off. So yes, we're full steam ahead.

Okay. Thank you, Graham. This is the final pre-submitted question. So the share price dropped to its lowest level ever just before the recent confirmation of the Managem agreement. Graham makes it clear that the current share price undervalues the company. Is there any consideration of the encouraging share price with of Director share purchases? A share buyback at the current price would make sense, as now cheap shares could be used to pay for services at a later date when the price has recovered. Is a dividend payment on the agenda? If so, when and what rates might we expect?

Well, there's a lot of things wrapped up in that question, and some of them have been answered by Garry already, like we have no share authority to issue shares. We've talked about the share buyback concept. And these are all good points. And, as Garry alluded to, we're 100% up almost on where we were at Tuesday last week. So obviously, the market has started to recognize that the uncertainty of whether we'll close with Managem or not has happened, and it's clear now. There's no further uncertainty. We have the funding, and we are ready to go forward. The issue with Directors buying shares is always a perennial question. It is very much the open and close period story. And you know that there are statutory periods where we are closed. And if Directors are in an open period, then they're able to buy shares. If they are in a closed period, they're not able to buy shares. And we monitor that very closely with our [indiscernible]. And in our Board reports that we internally prepare each week, we advise our Board what the situation is. So without going into any great detail, if we're privy to any price-sensitive information, we can't go out in the market and buy shares. So it'll be remiss of me to purchase shares tomorrow and then on Monday announce something additional to what we've been doing with Managem. What do we do with the funds? Well, Garry, you've explained that we're looking for accretive acquisitions or accretive projects. A dividend policy is difficult when you're not revenue generating. And our current policy with the company is once we have cash flow, once we have positive cash flow, and we can predict that, then we can consider dividends. But at the moment, this is typical for the type of company we are. We're going to reinvest the money in our business and grow the share price that way.

Okay. Thank you, Graham. So there's a few questions that came in whilst we were on the presentation this afternoon. So I'll put the first one to John, if that's okay. John, what happened to TE-4?

Nothing at all has happened to TE-4. It's a target, a prospect that remains in our portfolio. And as I said before, we certainly have an aspiration to get that well drilled.

Good. Do you want me to take over, Garry, or do you want to carry on doing them? I'm happy to.

Yes. I'll just continue, Graham.

Go ahead.

Next one, well done in the last year. Just one question. Are Schlumberger still involved in the assets in any way? And if yes, can you explain how? Simple answer, no, they're not.

[ Whenever they're ] able to provide services as a service provider to us, and they have services in country, which we can continue to use.

When do you forecast Sound Energy having a positive cash flow being reached under current expectations? Well, it's obviously quite a dynamic, evolving picture because we do have aspirations for growth. And I mentioned earlier that we are looking for revenue-enhancing opportunities at the current time. We've been doing that for quite a period of time, and that activity is going to intensify over the coming period. Having said that, based upon the current portfolio, obviously, we've got expectation of revenue coming from Phase 1 next year. And then from Phase 2, hopefully, we start to build on revenues from Phase 1 around the middle of 2027. Now, it's quite an interconnected picture because, obviously, we will generate positive cash flow from Phase 1, but we're also in the investment phase on Phase 2. So it's not until we get into Phase 2 and stabilize production that the company starts to regularly generate positive free cash flows from the business.

I think, Garry, you've answered the next one, which is about consolidation of shares. This can usually be the death knell for a share value for small caps. So I think we can say that one was taken.

Okay. With regards to SBK, what techniques and other differences are going to be undertaken to make this well more successful than the previous operator's effort? What are you going to do differently from the previous operator's activities, location, stimulation, anything else?

John, do you want to answer that one or should I?

Well, I'd love to, but you're better than me.

No, that's okay. So let me think. So SBK, that well was drilled in 2000. So it's coming up to 25 years ago. It was drilled before even TE-4 and TE-5. So clearly, it's an early well in the basin. You could take that we will be taking the lessons from drilling SBK. We have access to all of the well reports on the data associated to that. It's about ensuring that you obviously have the correct well architecture and design. We understand the [ poor pressure regime ], et cetera, from SBK-1 and the data from that drilling campaign, and you'll need the correct rig to drill that well as well. But for me, it's all these wells, it's keeping it simple. It's a vertical well, no multiple sidetracks with the previous well had, no directional drilling. In terms of the location, we would be drilling it -- I think we have a planned location somewhere around 400-odd meters away, so not too far away from the original well. The original well wasn't stimulated. So it did flow without stimulation. But obviously, we could be looking at a stimulation program post-drill depending on how we complete it. So there's a little bit of work to be done on the well design on that. But I'm more than confident that we will be able to execute that well successfully in the future.

Okay. Thank you, John. The next one for you, again, it's the second last question that we have, actually. So John, you've been talking about a farm-in partner for Sidi for about 10 years, to my knowledge. I don't think you've been with the company for that long. But anyway, you've been talking to partners for a long time. Is there any interest? Are you planning to go it alone?

No, I think that's a good question, a valid point. Just to be clear, we entered the Sidi Moktar onshore license in 2018. So it hasn't been 10 years. We are obviously impatient as well, but these things do take time, okay? We need, as explorers, we need to have persistence, tenacity to keep things moving. But just to remind people, I showed Graham some data, I think we have consulted, didn't we, Graham, that the average farm-out, it's 4 to 5 years, the average farm-out in the industry, okay? But that is a long time. We'd like to do things quicker, but it's not unusual for these things to take time, unfortunately.

I think, John, your seismic survey, getting the results of that and firming up a prospect surely must help.

That's right. So we could right-size that survey to something that we could manage ourselves, we could mature up a prospect with that survey, and that would certainly enhance our ability to farm-out and potentially make it more attractive. We have received interest for a number of years now. It's just getting it across the line. You only need to get it across the line with one individual successfully. So we're working as hard as we can to achieve that.

Thank you, John. Okay. Final question, maybe one for you, Graham. I know we've touched on this to a degree earlier on, but this question says, are Sound looking at any acquisitions to assist in providing revenue? And if so, is it in Morocco or elsewhere?

Yes. Well, essentially, the question can be addressed to me, but it's the 3 of us that are doing this. So we are looking at diversifying the portfolio. We are looking at organic growth within Morocco, and we'll see whether that brings anything accretive. We are looking at potentially something outside of the, let's just call it, the pure hydrocarbon business, maybe something in other transition energies in Morocco. I think doing that outside of Morocco is a first step. We play to our strengths. We know Morocco reasonably well. We have good supporters in Morocco. So if we're going to do something outside of the energy hydrocarbon business, we'll do it in Morocco. But that doesn't mean that there's not good opportunities either in the fishing pool of the AIM market or in the North Africa, Middle East scenario for looking at the hydrocarbon opportunities. But it's got to be accretive. We've got to treat this cash that we have in our bank with kid gloves and very, very preciously look after it. It's amazing how quickly it will disappear if we're not careful. Saying that, we'll be opportunistic. So it goes back to almost the very first question about what did I say to Zak Mir, as we're in a stronger position now. We're in the driving seat. We can perhaps be a little bit more in tune with where the market is and drive our own fortune from a relatively stronger position than we would have been just 6 weeks ago. So the answer is, yes, we will be looking at potential growth opportunities inside Morocco and outside of Morocco where appropriate.

Okay. Thank you, Graham. That's it on the questions.

Garry, thanks so much indeed for running through those questions and to the team for taking them all and covering those. All of you've answered every single question we've had through. So thank you very much indeed for that. Any further questions that do come through, the team will be able to review those and submit responses where appropriate to do so. But before redirecting investors to provide them with your feedback, I'll even say it, which is particularly important to you and the company. Graham, can I just ask you for a few closing comments, please?

Well, it's just a summary of what we've been saying. Let me just start by saying, I really do have to thank the team. It is a team approach. The team in London and the U.K., this has been a combination of a process that's almost 18 months. But I think we've shown that we've now got a great partner in Morocco with Managem. And it's not just the U.K. team, though to think about. You've got to think about our team in Morocco, in Sound Energy Morocco. They've done a great job getting us to where we've got to. And it doesn't stop for them. They are still operating. They are still out there on the site today. They're still welding today. And they've managed the personal transition from the ownership of Sound Energy plc to the ownership of Managem very robustly, very well, with good spirit. So I'd like to thank the Sound Energy Morocco East team, particularly. For shareholders, I think, as I say, the future is in our hands now. We're in a much stronger position. We're positioning ourselves to grow organically or inorganically. So we do want to not sit on our laurels. We want to grow this company and give value to all shareholders and see the share price appreciation. But the key thing is now for 2025, we'll be on production with the LNG sales. We have the good opportunity with a fully funded Phase 2 pipeline development with a great partner. And I would love to have 2 exploration wells drilled. So lots of triggers for share price growth and activity. All I can say is it's been a happier end to the year than it's been in the past. I hope you now believe in this team that we can deliver. I would like to thank all our stakeholders, our shareholders, for their patience in 2025. Of course, the Ministry in Morocco, of course, ONHYM, our state partner in Morocco. And we look forward to updating you in the early new year and maybe even meeting in person. I'd like that. So thank you, Paul, and thank you, everybody, for the time to listen to us today.

Fantastic, Graham. Thank you, John, Garry as well. Thank you very much indeed for updating investors today. Can I please ask investors not to close the session to now be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of Sound Energy plc, I'd like to thank you for attending today's presentation. That concludes today's session, and good evening to you all.